Key Talking Points:
- DAX 30 sellers reject a consolidation above 16,000, breaking 5-day winning streak
- Political tensions in Afghanistan and growth concerns cast a shadow over equities
The DAX 30 is starting the week a little softer after setting a new record high on Friday, having crossed the 16,000 mark for the first time ever. Weaker than expected data out of China this morning has set the mood this morning as it serves to show that the second-largest economy is struggling to keep up growth momentum amid the recovery from the covid-induced recession.
Also dampening the mood this morning is the political tensions arising from Afghanistan, after the Taliban troops have seized control of pretty much all of the country, taking over the capital city of Kabul overnight. It’s hard to assess at this point how much impact this situation will have on the markets, but it could have a negative effect on equities should tensions escalate further.
DAX 30 Daily chart
The question now is whether the DAX has enough steam to steer a continuation or whether the bullish run falters from here on out. I have to say, despite all the uncertainties out there, equities remain on a pretty solid path higher, following the path of least resistance as the recovery trade pushes along. Out of the last 20 daily candlesticks, only 5 are in red, with one of them being today’s and the session only just underway, so it is currently looking like a 75% positive daily close-out so far.
Last month’s bearish pullback served to reinforce the 15,000 mark as medium-term support where sellers are going to have to build up momentum to break below. The pullback so far looks limited above 15,800 so we may see the DAX 30 pushing up above 16,000 by week-end if there isn’t a further follow-through in risk-off sentiment.
— Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin